HSBC Bank Malta is to open a flagship Premier branch this year according to the high-end proposition's new group-wide blueprint, Andy Ripley, the bank's head of personal financial services told The Times Business.

The new look for HSBC Premier in Malta is part of a wider local investment plan encompassing the bank's branch and ATM network.

Describing Premier as "the best banking proposition that money can't buy", Mr Ripley said the bank was very satisfied with the Maltese's take-up of the exclusive personal banking offering. The targets for 2009 had been reached, and progress this year has been excellent.

To reward customers' loyalty, Premier offers customers better pricing on a range of investments and products. In Malta, Mr Ripley explained, the Premier credit card has "a very competitive interest rate and an attractive reward scheme".

Globally, HSBC Premier boasts three million clients out of the international network's 100 million clients. The Premier offering is available with the same consistent, high standard service to clients in 40 of the 86 countries and territories where HSBC is present.

Mr Ripley, the deputy chief executive of HSBC's UK division of Marks and Spencer's Money before taking up his Malta post in September, said HSBC was constantly reviewing the branch footprint. A strategic review initiated before his relocation to the island also examined customer transactional patterns.

"Counter transactions have declined by 25 per cent over the last five years," he explained. "Automated banking use has risen by 30 per cent. Customers are using branches in different ways. We are continuously studying the potential of two new locations for branches.

"We are looking at four sites for ATMs which are subject to planning approval. Whatever happens in the branch network, we are going to invest. HSBC is the most valuable financial services brand in the world. We have to have the right branding across the whole distribution. We are going to upgrade our branch network and our ATMs over the next few years."

Maltese customers still carry out more counter transactions than in other countries, but the local customer base is increasingly moving towards self-service channels.

While telephone banking use has risen by 39 per cent over the past five years, internet banking usage has trebled, placing Maltese HSBC customers among the global network's most tech savvy. The bank aimed to accelerate the trend by educating customers to make more use of alternative banking methods. Even the elderly, who are among the most frequent visitors to branches, were increasingly trying their hand at online banking.

Cheques, however, remain a valued form of payment method in Malta, despite their considerable decline internationally. The UK's Payments Council announced last December that cheques will be phased out by 2018. Mr Ripley believed the cheque would die out in the UK even earlier, but there was no talk of doing away with it in Malta for a long time, despite it being less cost-effective and time-consuming.

A culture change was needed where customers would effect payment, even for small amounts, online simply by keying in a sort code and an account number.

Mr Ripley said the bank was also keen to begin to define some of the benefits of the credit card to Maltese customers who, with their responsible attitude to debt, were not making the best use of their plastic.

"To Malta's credit, people do not generally spend more than they can afford to pay. The bad debt write-offs here are very low and that reflects customers, their attitude to debt, and the bank's cautious approach to unsecured lending," Mr Ripley said, pointing out that credit cards' benefits included 56 days' interest-free credit and protection if products purchased with a card remained undelivered.

"We will work harder to educate customers," Mr Ripley continued. "Travelling customers take their credit card with them as a payment vehicle but they load money on it to spend when they are abroad. They do not need to do that."

Mr Ripley was also surprised that few Maltese customers fixed their mortgage rate, particularly while interest rates were low.

"One of HSBC's current offers features a fixed rate that is lower than the variable rate. The HSBC view is that interest rates will start to rise again in the second half of the year. Customers are able to fix their mortgage rate for between two to 10 years to protect themselves from any rise in base rates. The practice has worked well in the UK."

Thanks to good credit quality, more stringent affordability checks and low loan-to-value rates, HSBC has ensured customers have room for manoeuvre when interest rates begin to rise, Mr Ripley emphasised.

He conceded that recent bond issuance has had a minor impact on HSBC's deposit base, but the issues were encouraging a shift to different products as customers sought flexibility.

"There is a shift from longer term deposits to shorter term demand deposits," Mr Ripley explained. "People are keeping more money in demand deposits so that they can benefit from bond issues or other products that we offer, like longer term investments with higher interest rates."

As more players entered the term deposit market, Mr Ripley said, HSBC's preferred policy was to offer consistent products of good value rather than headline campaigns with attractive rates for a short term.